PORTLAND, Ore. -- The Pacific Northwest Smart Grid Demonstration, the largest of 16 U.S. Department of Energy pilot projects, is under way in five Northwest states. It seeks ways to balance the region's huge base of hydroelectric power with its fast-expanding collection of wind farms.

With a budget of $178 million split evenly between an American Recovery and Reinvestment Act grant and local contributions by 11 utilities and other partners, the smart grid project (pdf) covers a wide array of missions. Charging plug-in electric vehicles, improving wind forecasting and creating a novel market "signal" meant to reflect a higher value for low-carbon electricity are among them.

A critical experiment centers on coping with wind power's starts and stops by paying consumers to let utilities store surplus wind energy in hot water heaters. These and other energy conservation initiatives in the Northwest may become models for utilities and regulators elsewhere that are also facing the challenges of managing intermittent renewable energy flows, officials here say.

"We hope to learn a lot about wind integration. It is an important issue for the nation, the Pacific Northwest and Bonneville," said Lee Hall, Bonneville's Smart Grid Program Manager.

The Northwest needs some answers urgently.

"Right now, there is a major challenge in accommodating wind power," said Jeffrey King, senior resource analyst at the Northwest Power and Conservation Council in Portland. The council's Sixth Northwest Conservation and Electric Power Plan, issued this year, sets the region's energy agenda through 2015.

Until now, hydro dams have primarily backed up wind, adding energy when wind speeds wane and backing off when wind picks up. Those days are numbered, because the queue of wind projects continues to grow.

"We're getting to the end of the ability to use the hydro system for balancing," said Eric King, wind integration project manager at the Bonneville Power Administration, which markets the electricity from the region's federal dams.

More wind requires a more reliable backstop

If all politics is local, the Pacific Northwest stands for the proposition that all energy policy is regional. A traveler headed east from Portland through the sculpted Columbia River Gorge encounters the hydro dams first, beginning with the New Deal-era Bonneville installation. The first of more than 600 towering wind turbines come into view an hour later along the river's ridges.

Since 1998, wind developers have added 4,000 megawatts of wind power generation capacity, which is available about one-third of the time. The region has about 33,000 megawatts of hydropower and can call on about half of that on average, because of seasonal low water conditions.

Half of the new wind energy is purchased by California utilities to meet their state's demanding renewable energy requirements, said Jeffrey King. Oregon, Washington and Montana also have state renewable portfolio standards, contributing to a demand that could possibly push wind generation capacity as high as 12,000 megawatts in 2016, three times the current amount, according to the council's report.

But wind and water aren't turning out to be such good neighbors, said Steve Weiss, senior policy associate at the NW Energy Coalition, an advocate for clean energy and environmental protection in the Columbia River Basin. "Hydro sounds like it's a great fit for wind, but it turns out to be pretty terrible fit."

When the river is high and the wind blows hard, the region can be confronted with too much power. Hydropower from the region's dams could provide a fast-acting backstop when wind power suddenly ramps up or down, but the Columbia's flow has many claimants.

"There are lots of operational parameters that have to be addressed, including flood control, navigation, irrigation, recreation, and, of course, the compliance with the Endangered Species Act," said BPA's Hall. During the spring months, when melting snow fills the Columbia basis, dam operators are stretched to manage the river flow through their systems: Too much spillage over the dam can upset the river's oxygen-nitrogen balance, killing salmon.

"It's pretty urgent," said Terry Morlan, division director of the council's Power Planning Division. "Bonneville had to scramble like crazy to deal with some of the situations where wind ramps up and down quickly."